Global Trustee and Fiduciary Services Bite-Sized Issue 12 2023

Global Trustee and Fiduciary Services Bite-Sized | Issue 12 | 2023 6 QUICK LINKS AIFMD BENCHMARK REGULATION CBDC COSTS & CHARGES CRYPTOASSETS FUND LIQUIDITY LIBOR TRANSITION MiCA OPERATIONAL RESILIENCE UK PRIIPs SUSTAINABLEFINANCE/ESG ASIA EUROPE IRELAND NORTH AMERICA UNITED KINGDOM The letter also sets out the PRA’s broader expectations for banks regarding their use of digital money for retail or wholesale innovations, in areas such as operational resilience, anti-money laundering, counter-terrorist financing, and liquidity and funding risks. The FCA, Bank and PRA have also published a cross-authority roadmap paper on innovation in payments and money, which explains how UK authorities’ current and proposed regulatory regimes for issuers of different forms of digital money or money-like instruments will interact. Link to the FCA Discussion Paper here Link to the Bank of England Discussion Paper here Link to PRA Dear CEO Letter here Link to Roadmap here Circular on Tokenisation of SFC-authorised Investment Products On 2 November 2023 the Securities and Futures Commission (SFC) issued a circular setting out the requirements under which it would consider allowing tokenisation of investment products authorised by the SFC under Part IV of the Securities and Futures Ordinance for offering to the public in Hong Kong. The SFC states that it has been assessing various proposals on tokenisation of SFC-authorised investment products, for example, some for primary dealing of a tokenised product (i.e., subscription and redemption) and some for secondary trading of a tokenised product on an SFC-licensed virtual asset trading platform. The SFC is of the view that it is appropriate to allow primary dealing of tokenised SFC-authorised investment products, as long as the underlying product can meet all the applicable product authorisation requirements and the additional safeguards to address the new risks associated with the tokenisation arrangement as detailed in the Circular. However, secondary trading of tokenised SFC-authorised investment products would warrant more caution and careful consideration in order to provide a substantially similar level of investor protection to those investing in a non-tokenised product. The considerations include maintaining proper and instant token ownership record, readiness of the trading infrastructure and market participants to support liquidity, and fair pricing of the tokenised products, among others. As such, the SFC states that it will keep in view and continue to engage with market participants on proper measures to address the risks relating to secondary trading of tokenised SFC-authorised investment products. Link to the Circular here In addition to the Circular on authorised investment products, the SFC issued a Circular to intermediaries engaging in tokenised securities-related activities. Link to the Circular here